LAS VEGAS, April 28 /PRNewswire-FirstCall/ -- Southwest Gas Corporation
(NYSE: SWX) announced consolidated earnings of $0.88 per basic share for the
first quarter of 2005, a $0.31 decrease from the $1.19 per basic share earned
during the first quarter of 2004.  Consolidated net income was $32.8 million,
compared to $41 million in the prior period.
    According to Jeffrey W. Shaw, Chief Executive Officer, "The decrease in
earnings between quarters is primarily due to the impact on operating margin
of warmer weather in the first quarter of 2005 when compared to the same
period in 2004 and an increase in operating costs between the quarters.  Rate
design changes in recent rate case decisions in Nevada and California have
mitigated the impact of weather on operating margin; and rate relief granted
in these jurisdictions has helped compensate for increased costs.  However,
our financial results still reflect the impact of weather and increased costs
in our largest operating area -- Arizona.  The rate case on file in Arizona
addresses these rate design and rate relief issues and we are hopeful that a
favorable decision will be received later this year."
    For the twelve months ended March 31, 2005, consolidated net income was
$48.6 million, or $1.35 per basic share, compared to $54 million, or $1.59 per
basic share, during the twelve-month period ended March 31, 2004.  A decline
in operating results from the natural gas operations segment was partially
offset by improved construction services segment results.

                    Natural Gas Operations Segment Results

    First Quarter
    Operating margin, defined as operating revenues less the cost of gas sold,
decreased approximately $6 million, or three percent, in the first quarter of
2005 compared to the first quarter of 2004.  During the last twelve months,
the Company added 82,000 customers, an increase of five percent.  This
customer growth contributed an incremental $5 million in operating margin
during the quarter.  Rate relief in Nevada and California added a net $1
million in margin compared to the prior-year quarter (the prior-year quarter
included $3.3 million in California rate relief delayed from 2003).
Differences in heating demand caused by weather variations between periods
coupled with reduced average usage due to conservation and energy efficiencies
accounted for a $12 million decrease.  Temperatures during the current period
were warmer than normal, whereas prior-period weather was relatively normal.
    Operating expenses for the quarter increased $6.7 million, or six percent,
compared to the first quarter of 2004 primarily due to general cost increases
and incremental operating costs associated with serving additional customers.
Net financing costs increased $1.3 million, or six percent, between periods
primarily due to an increase in average debt outstanding to help finance
growth and higher rates on variable-rate debt.

    Twelve Months to Date
    Operating margin increased $28 million, or five percent, between periods.
Continuing customer growth contributed an incremental $20 million.  Rate
relief in California and Nevada added $13 million.  Differences in heating
demand caused by weather variations between periods and lower usage due to
conservation and energy efficiencies resulted in a $5 million margin decrease
as warmer-than-normal temperatures were experienced during both periods.  The
unfavorable impacts of these factors were approximately $17 million in the
current twelve-month period and $12 million in the prior period.
    Operating expenses increased $35 million, or eight percent, between
periods reflecting general increases in labor and maintenance costs, and
incremental operating costs associated with serving additional customers.
Additional factors include increases in insurance premiums, employee-related
expenses, compliance costs, and costs to develop energy efficient technology.
    Net financing costs rose $4.8 million, or six percent, between periods
primarily due to an increase in average debt outstanding to help finance
growth, partially offset by a reduction in interest costs associated with the
purchased gas adjustment account balance.

    Southwest Gas Corporation provides natural gas service to 1,632,000
customers in Arizona, Nevada, and California.  Its service territories are
centered in the fastest-growing region of the country.

    This press release may contain statements which constitute
"forward-looking statements" within the meaning of the Securities Litigation
Reform Act of 1995 (Reform Act).  All such forward-looking statements are
intended to be subject to the safe harbor protection provided by the Reform
Act.  A number of important factors affecting the business and financial
results of the Company could cause actual results to differ materially from
those stated in the forward-looking statements.  These factors include, but
are not limited to, the impact of weather variations on customer usage,
customer growth rates, changes in natural gas prices, the ability to recover
costs through the PGA mechanism, the effects of regulation/deregulation, the
timing and amount of rate relief, changes in rate design, changes in gas
procurement practices, changes in capital requirements and funding, the impact
of conditions in the capital markets on financing costs, changes in
construction expenditures and financing, changes in operations and maintenance
expenses, future liability claims, changes in pipeline capacity for the
transportation of gas and related costs, acquisitions and management's plans
related thereto, competition, and the ability to raise capital in external
financings.  In addition, the Company can provide no assurance that its
discussions regarding certain trends relating to its financing, operations,
and maintenance expenses will continue in future periods.



                  SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
                   (In thousands, except per share amounts)

     QUARTER ENDED MARCH 31,                     2005                2004
     Consolidated Operating Revenues           $542,880            $473,400
     Net Income                                 $32,829             $41,044
     Average Number of
      Common Shares Outstanding                  37,097              34,411
     Basic Earnings Per Share                     $0.88               $1.19
     Diluted Earnings Per Share                   $0.88               $1.18


     TWELVE MONTHS ENDED MARCH 31,               2005                2004
     Consolidated Operating Revenues         $1,546,540          $1,301,119
     Net Income                                 $48,560             $54,007
     Average Number of
      Common Shares Outstanding                  35,869              34,001
     Basic Earnings Per Share                     $1.35               $1.59
     Diluted Earnings Per Share                   $1.34               $1.57

Link to this page: